Troubled Airbus to cut 10,000 jobs in bid to end superjumbo crisis

Published on Thursday 1 March 2007 00:31

AIRBUS is cutting 10,000 jobs over four years at its 16 European sites - including 1,600 in the UK - and plans to sell or find partners for six factories in an attempt to end a financial crisis sparked by delays in the A380 superjumbo.

It is hoped the plan, known as Power8, will cut 2.1 billion (1.4bn) from annual spending by 2010 and the company will take a 680m charge in the first quarter to pay for the job cuts. "The core objective of Power8 is to make Airbus more efficient and competitive, so as to produce the most advanced and profitable products," said Louis Gallois, chief executive of Airbus parent company, EADS.

He blamed the ongoing problems at Airbus on the weakness in the US dollar, increased competitive pressures and the financial burden linked to delays in the A380.

The plan comes as Airbus is set to report its first-ever annual loss after costs for the A380 ballooned to $18bn from $12bn. The planemaker also plans to spend 11.8bn to develop the A350 XWB to challenge the Boeing 787.

The UK jobs cuts will be from a workforce of 11,000 staff at sites in Filton, Bristol, and in Broughton, North Wales, which specialise in producing wings.

An official spokesman for the Prime Minister, Tony Blair, said: "We obviously regret any job losses at all."

Alistair Darling, the Trade and Industry Secretary, added: "While the job losses here - and in even greater number in France and Germany - are to be regretted, the long-term future for Airbus in the UK is a good one. We have fought our corner hard to ensure the most modern technology of wing design, manufacture and assembly will be in this country and gain high value work for future planes well into the next decade."

The biggest cuts will be 3,200 in France, 3,700 in Germany with 400 in Spain. Around half the jobs were temporary or involve sub-contractors, where reductions would begin immediately. The priority would be given to achieving the job cuts through voluntary severance and it did not propose any compulsory redundancies "at this stage".

As part of the plan, Airbus said it was considering industrial partnerships at a number of its plants, including Filton, to facilitate their development from metallic to composite design and manufacturing technology.

Gallois said the company needed to face up to the reality that its business was in need of significant and far-reaching change.

He emphasised the main "trigger" for the overhaul was the production problems with the A380, which have pushed back deliveries of the plane by two years and cost the company about 5bn.

But he said the core problem was the weakness of the US dollar against the euro. Aircraft sales are priced in dollars while about half or Airbus's costs are in euros.